Paramore v. Delta Air Lines, Inc. , 129 F.3d 1446 ( 1997 )

United States Court of Appeals,
Eleventh Circuit.
No. 96-8299.
Jacqueline PARAMORE, Plaintiff-Appellant,
v.
DELTA AIR LINES, INC., Defendant,
Delta Family-Care Disability and Survivorship Plan, Defendant-Appellee.
Dec. 2, 1997.
Appeal from the United States District Court for the Northern District of Georgia. (No. 1:94-CV-
1539-JEC), Julie E. Carnes, Judge.
Before BIRCH, Circuit Judge, and HILL and FARRIS*, Senior Circuit Judges.
BIRCH, Circuit Judge:
Jacqueline Paramore, a former flight attendant for Delta Air Lines, Inc. ("Delta"), filed this
action under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §
1132(1)(b) and (e), in which she sought an award of long-term disability benefits pursuant to the
Delta Family Care Disability and Survivorship Plan ("the Plan"). Paramore contended that the
Administrative Committee, acting in its capacity as administrator and fiduciary, violated the terms
of the Plan and the governing federal law embodied in ERISA by denying the requested benefits.
The district court determined that the Administrative Committee's decision to deny long-term
disability benefits was neither arbitrary nor capricious and granted summary judgment in favor of
Delta. For the reasons that follow, we conclude that the "arbitrary and capricious" standard of
review is the appropriate standard by which to evaluate a plan administrator's factual findings in
*
Honorable Jerome Farris, Senior U.S. Circuit Judge for the Ninth Circuit, sitting by
designation.
cases involving the denial of benefits under ERISA. We further conclude that the district court
properly applied this standard of review to the facts of this case in upholding the Administrative
Committee's decision. We therefore affirm.
I. BACKGROUND
For the limited purpose of resolving the issues presented in this appeal, the following facts
are found to be undisputed: Jacqueline Paramore worked for approximately eleven years as a flight
attendant for Delta. In 1991, while performing her job during the course of a flight, Paramore was
involved in an incident that resulted in injury to her neck and shoulder. After an initial period of
recuperation at home, Paramore returned to work sporadically for approximately one year.
Paramore subsequently sought and received short-term disability benefits pursuant to the Plan; these
benefits were awarded based on certifications from two treating physicians, Dr. Kenneth Lazarus
and Dr. Patricia Tewes, who affirmed that Paramore had experienced a cervical strain. Paramore
next requested long-term disability benefits and sought certification for such benefits from Dr.
Tewes. Dr. Tewes, however, indicated that Paramore could perform some light clerical work.
Based on Dr. Tewes' observations, the request for long-term disability benefits was denied.
In accordance with the Plan's procedural framework, Paramore appealed this decision to the
Administrative Subcommittee ("the Subcommittee"). Paramore specifically requested the
Subcommittee to afford greater weight to the opinion of Dr. Lazarus, her treating physician, rather
than Dr. Tewes, to whom she had been referred. At the Subcommittee's request, Paramore also was
examined by Dr. Nicol, who withheld his opinion concerning Paramore's long-term prognosis
pending further tests; Dr. Nicol did note his initial impressions of Paramore's condition as follows:
Difficult to know exactly what's going on with this lady. She has symptoms of cervical
strain and sprain, but no focal organic neurological deficits and, in fact, she has some
"deficits" that would lead me to believe that there is a very large functional component to
her disorder at the present time.
Exh. 11 at 3. Dr. Lazarus forwarded to the Subcommittee a letter stating his belief that Paramore
would be "unable to work in any capacity on even a part-time basis" and that her condition likely
would "continue indefinitely despite maximum treatment." Exh. 12. Paramore also received a
psychological examination by Dr. Wright, who rendered the following findings:
Psychological testing results with this patient suggest considerable stress, but very little
subjective psychological discomfort. Most of her stress and psychological pressures are
being diverted into somatic symptoms, and she is quite preoccupied with her somatic
processes while attempting to deny and repress any subjective psychological discomfort.
I could not rule out the possibility of a conversion disorder. She has developed most of the
classic signs of "chronic pain syndrome." Test indications regarding cognitive and
intellectual abilities show the patient to be functioning within the bright-normal range with
no problems. There were indications of organic brain dysfunction on testing.
Exh. 17. Pursuant to these observations, Dr. Wright recommended that Paramore would benefit
from psychotherapy in addition to any other treatment she was receiving for chronic pain. Dr. Nicol
subsequently wrote to the Subcommittee after reviewing both Dr. Wright's report and the results of
the tests he previously had ordered. With respect to psychological aspects of Paramore's condition,
Dr. Nicol stated: "I don't think that Ms. Paramore is suffering from any major physical disability,
but psychosomatic aspects of her illness have supervened and are causing the majority of her
problems at the present time." Exh. 20. In a separate letter, Dr. Nicol stated, in pertinent part:
At the present time it would be my professional opinion that she is disabled, but I
can't say as a result of demonstrable injury, because there was no demonstrable injury, at
least from a purely physical standpoint. I think there probably is demonstrable injury from
a psychological standpoint.
I hope that this answers your questions satisfactorily. I hope that you will be able to
get Ms. Paramore some ongoing psychological help so that she will [be] able to get back to
work full time in the not too distant future as a flight attendant once these other issues have
been addressed.
Exh. 21. Dr. Nicol further observed that although Paramore, in his view, was not capable of
performing her customary job on a full time basis without limitations, she nonetheless was
physically capable of performing sedentary work. See id.On the same date on which Dr. Nicol filed his report with the Subcommittee, Dr. Tewes
notified the Subcommittee that Paramore was no longer under her care and that Dr. Lazarus should
make any further decisions regarding her capacity to work. Dr. Lazarus subsequently wrote a letter
to a Subcommittee representative concerning Paramore's case and stated:
With regard to Ms. Paramore's disability status, I believe that it would be appropriate for Ms.
Paramore to return to some sort of sedentary work activity. I think this would be helpful to
her, both with regard to her self-esteem and her recovery from her injury.... [I]n an
appropriately supportive environment, I believe that Mrs. Paramore could and should return
to some form of sedentary work.
Exh. 27.
After reviewing the doctors' submissions, the Subcommittee affirmed the denial of benefits
and determined that Paramore's entitlement to disability benefits terminated as of November 14,
1992. Paramore appealed this decision to the Administrative Committee. Shortly thereafter, Dr.
Lazarus wrote to the Administrative Committee a letter stating, in relevant part:
I have been the treating physician for Mrs. Paramore and have been primarily responsible
for her care. Decisions on her benefit status were apparently made with reference to forms
filled out from other treating physicians, despite the fact that I have been the primary treating
physician in this case. I am not certain on what basis the other physicians made their
determination. It is my opinion that Mrs. Paramore was unable to return to any sort of
gainful employment, even on a part-time basis prior to February 22, 1993. From that time
forward, however, I do believe she has been capable of part-time sedentary work.
Exh. 33. The Administrative Committee determined, "[b]ased on information obtained from Dr.
Tewes and from independent examinations performed by Dr. Nicol and Dr. Wright, Ms. Paramore
could perform some type of work; ..." Exh. 46 at 3. Consistent with this determination, the
Administrative Committee decided that Paramore's disability benefits were correctly denied as of
November 14, 1992.
II. DISCUSSION
The district court's grant of summary judgment is subject to plenary review. See Canadyne-
Georgia Corp. v. Continental Ins. Co., 999 F.2d 1547, 1554 (11th Cir.1993). We therefore apply
the same legal standards as those controlling the district court. Id. The standard that properly should
have governed the district court's evaluation of the Administrative Committee's findings, however,
is disputed by the parties. Paramore contends that, although the Administrative Committee's
interpretation of the Plan's terms are subject to an arbitrary and capricious standard of review, the
court should have reviewed the Administrative Committee's factual determinations de novo. Delta
responds that the court appropriately examined the propriety of the Administrative Committee's
factual and interpretive conclusions solely to ascertain whether the denial of benefits in this instance
constituted either an abuse of discretion or an arbitrary and capricious resolution of Paramore's
claim.
ERISA does not provide a standard to review decisions of a plan administrator. In Firestone
Tire and Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the Supreme
Court looked to the principles underlying trust law as largely defining the role and responsibilities
of a plan fiduciary or administrator;1 more specifically, the Court reasoned that, "where discretion
is conferred upon the trustee with respect to the exercise of a power, its exercise is not subject to
control by the court except to prevent an abuse by the trustee of his discretion." Id. at 111, 109 S.Ct.
at 954 (internal citation and quotation marks omitted). Applying these principles, the Court
established a range of standards that pertain to benefits determinations under ERISA:
a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo
1
Our discussion of the standard of review refers primarily to the proper level of deference
afforded a plan administrator; our conclusions in this regard obtain with equal force, however,
to plan fiduciaries. We previously have noted that the Supreme Court's treatment in Firestone of
the possible standards of review that might apply to determinations rendered under
ERISA-governed plans "applies equally to the decisions of fiduciaries and the plan
administrator." Brown v. Blue Cross & Blue Shield of Ala., 898 F.2d 1556, 1560 (11th
Cir.1990).
standard unless the benefit plan gives the administrator or fiduciary discretionary authority
to determine eligibility for benefits or to construe the terms of the plan.... Of course, if a
benefit plan gives discretion to an administrator or fiduciary who is operating under a
conflict of interest, that conflict must be weighed as a facto[r] in determining whether there
is an abuse of discretion.
Firestone, 489 U.S. at 115, 109 S.Ct. at 956-57 (citations and quotation marks omitted).
Consistent with the Court's directive in Firestone, we have adopted three standards of review
for plan interpretations: (1) de novo, applicable where the plan administrator is not afforded
discretion, (2) arbitrary and capricious when the plan grants the administrator discretion, and (3)
heightened arbitrary and capricious where there is a conflict of interest. Buckley v. Metropolitan
Life, 115 F.3d 936, 939 (11th Cir.), rehearing denied, --- F.3d ---- (11th Cir.1997) (citing Marecek
v. BellSouth Services, Inc., 49 F.3d 702, 705 (11th Cir.1995)).
Paramore and Delta agree that the plan at issue in this case affords the Administrative
Committee discretion to construe the Plan's terms. For instance, the Plan expressly mandates that
eligibility for disability benefits "shall be determined by the Administrative Committee or its
designees," R1-1, Exh. A at 23, and confers on the Administrative Committee the power
[t]o interpret the Plan, and decide all questions of eligibility of any Eligible Family Member
to participate in the Plan or to receive benefits under it, its interpretation thereof in good faith
to be final and conclusive; [t]o determine the amount, manner, and time of payment of
benefits which shall be payable to any Employee or Dependent, ... [and] to decide all
questions concerning the Plan; ...
Id. at 48-49.
Neither party contends that the Administrative Committee's interpretation of the plan's terms
is at issue here; rather, the parties ask us to decide what constitutes the proper standard of review
with respect to the Administrative Committee's factual determinations as incorporated in its ultimate
conclusion that Paramore was not entitled to long-term disability benefits.
Our court has not yet conclusively stated the standard applicable to an ERISA plan
administrator's factual findings. Significantly, we consistently have applied the arbitrary and
capricious standard to eligibility determinations—without necessarily distinguishing the factual from
the legal, interpretive bases of those decisions—in all instances in which a plan vested the
administrator or fiduciary with discretion to interpret the plan's terms or to resolve questions of
eligibility. See, e.g., Hunt v. Hawthorne Assoc., Inc., 119 F.3d 888, 912 (11th Cir.1997) ("The
arbitrary and capricious standard is the appropriate standard of review in this case because the Plan
contains express language conferring discretionary authority upon the administrator to construe its
terms."); Shannon v. Jack Eckerd Corp., 113 F.3d 208, 210 (11th Cir.1997) ("Denial of benefits
under an ERISA plan that gives the plan administrator discretionary authority to determine
eligibility for benefits or to construe the terms of the plan is reviewed by the district court for abuse
of that discretion."); Jett v. Blue Cross and Blue Shield of Alabama, 890 F.2d 1137, 1139 (11th
Cir.1989) ("The plan in this case does give the administrator of the plan discretionary authority to
determine eligibility for benefits and to construe the plan's terms.... Accordingly, the arbitrary and
capricious standard of review applies here.") (internal citations, markings, and quotation marks
omitted).2 Indeed, in only one case have we differentiated explicitly between an administrator's plan
interpretations and fact-based findings; our resolution of that case, however, rendered a decision
regarding the standard of review with respect to factual determinations to be unnecessary. See
Marecek, 49 F.3d at 707 ("We decline to decide which standard of review should be applied for
2
It is worth noting that our decisions involving the review of administrative decisions under
ERISA-governed plans do not distinguish between the terms "arbitrary and capricious" and
"abuse of discretion." See Jett, 890 F.2d at 1139 ("When conducting a review of an ERISA
benefits denial under an arbitrary and capricious standard (sometimes used interchangeably with
an abuse of discretion standard), the function of the court is to determine whether there was a
reasonable basis for the decision...."). Although we hereinafter refer to the proper standard of
review regarding the Administrative Committee's factual findings by the term "arbitrary and
capricious," we recognize that, for purposes of evaluating a plan determination, there is no
substantive distinction between the terms "arbitrary and capricious" and "abuse of discretion."
factual findings by a plan administrator as BellSouth's decision does not survive the most deferential
standard of review.").
Other circuits that have addressed the question of the level of deference to which factual
findings of an ERISA plan administrator are due uniformly have held that, where the plan confers
discretionary authority to determine eligibility and to construe the plan's terms, the arbitrary and
capricious standard of review applies. See, e.g., Rowan v. Unum Life Ins. Co. of America, 119 F.3d
433, 436 (6th Cir.1997) ("The de novo standard of review applies only when the plan does not
explicitly vest fact-finding discretion in the plan administrator."); Mitchell v. Eastman Kodak Co.,
113 F.3d 433, 438-39 (3rd Cir.1997) (where broad discretion afforded plan administrator was
undisputed, court applied Supreme Court's analysis in Firestone and held that "the appropriate
standard of review ... depends on whether the terms of this Plan grant the Administrator discretion
to act as a finder of facts.... [W]e conclude that the Plan Administrator's decision to deny ...
[long-term disability] benefits should be reviewed under an arbitrary and capricious standard.")
(citations and quotation marks omitted).3 Cf. Pierre v. Connecticut Gen. Life Ins. Co., 932 F.2d
1552, 1562 (5th Cir.1991) (holding that, regardless of discretionary authority of plan administrator
to interpret terms of plan, "for factual determinations under ERISA plans, the abuse of discretion
3
Interestingly, the Sixth Circuit has voted to rehear en banc a case involving the denial of
benefits under an ERISA plan. In its order granting en banc rehearing, the court expressly noted
that it would consider and resolve the following issue:
Whether the decision of the U.S. Supreme Court in Firestone ..., setting the
standards for the review of an administrator's discretion in making ERISA plan
decisions, encompasses decisions both of fact and of law, or whether the Supreme
Court's decision should be limited only to setting standards with regard to an
administrator's decisions of legal interpretation, while allowing unfettered
discretion in all cases with respect to factual decisions.
Perez v. Aetna Life Ins. Co., 106 F.3d 146 (6th Cir.1997) (en banc ).
standard of review is the appropriate standard; that is, federal courts owe due deference to an
administrator's factual conclusions that reflect a reasonable and impartial judgment.").
As noted, an examination of our own decisional law reveals that we consistently have upheld
application of the abuse of discretion standard of review to determinations involving both plan
interpretations and factual findings under ERISA. The consistency of our decisions in this arena
strongly suggests that our court has interpreted the Supreme Court's analytical framework in
Firestone, particularly in regard to the application of trust law principles to the level of deference
due an administrator or fiduciary, to mean that, where an ERISA plan grants discretion to a plan
administrator to interpret the express terms of the plan or to determine eligibility for benefits, we
review both the administrator's construction of the plan and concomitant factual findings with
respect to each case under an arbitrary and capricious standard of review. See Buckley, 115 F.3d at
939 ("Given that the ... Plan at issue here vests the administrator with discretion, the district court
properly employed the arbitrary and capricious guidelines in judging the administrator's factual
conclusions."). We are cognizant of the fact that other circuits to have decided this issue similarly
have found the arbitrary and capricious standard to obtain when the plan unambiguously affords
discretionary authority on the administrator. We further find persuasive the Third Circuit's
observation in Mitchell that " "application' of the Plan, like judicial "application' of the law, must
encompass the resolution of factual disputes as well as the interpretation of the governing provisions
of the Plan." Mitchell, 113 F.3d at 439.
Thus, where the plan affords the administrator discretion, the administrator's fact-based
determinations will not be disturbed if reasonable based on the information known to the
administrator at the time the decision was rendered. See Hunt, 119 F.3d at 912 ("Under the arbitrary
and capricious standard of review, the court seeks "to determine whether there was a reasonable
basis for the [administrator's] decision, based upon the facts as known to the administrator at the
time the decision was made.' ") (quoting Jett, 890 F.2d at 1139).
Applying this standard of review to the facts presented in this case, we conclude that the
Administrative Committee's decision to deny Paramore's request for long-term disability benefits
was reasonable based on the facts known to the Administrative Committee at all times relevant to
this action. Under the Plan at issue, an employee may qualify for long-term disability benefits if the
following conditions are met:
The Employee shall be eligible for Long Term Disability provided he is disabled at that time
as a result of demonstrable injury or disease (including mental or nervous disorders) which
will continuously and totally prevent him from engaging in any occupation whatsoever for
compensation or profit, including part-time work, but not including work performed in
connection with a rehabilitation program approved by the Administrative Committee.... The
Employee shall be eligible for Long Term Disability benefits so long as he remains disabled
in accordance with this subsection and Section 4.01.
R1-1, Exh. A at 21.
As described earlier, the Administrative Committee initially received conflicted information
from Dr. Tewes, indicating that Paramore was capable of sedentary work, and Dr. Lazarus, stating
that Paramore's condition was likely to require long-term disability due to her pain disorder. In an
attempt to gather further information, the Administrative Committee sought evaluations from several
other physicians, including a neurologist, Dr. Nicol, and a psychologist, Dr. Wright. Although these
doctors' medical evaluations both contained sporadic, internally inconsistent statements concerning
both the degree to which Paramore suffered from a physiological—rather than
stress-related—condition and the degree to which she was capable of returning to work on some
basis,4 the Administrative Committee's function was to evaluate the various reports in tandem and
4
For instance, Dr. Nicol's report stated both that "[a]t the present time it would be my
professional opinion that [Paramore] is disabled" and that "I hope you will be able to get Ms
Paramore some ongoing psychological help so that she will [be] able to get back to work full
render a determination as to Paramore's ability to engage "in any occupation whatsoever for
compensation or profit, including part-time work." See R1-1, Exh. A at 21. We cannot say that the
Administrative Committee's appraisal of the available medical information was unreasonable or
inconsistent with the data with which the Committee had been provided. Stated differently, we
conclude that there existed a reasonable basis to support the Administrative Committee's factual
determination that, based on the administrative record examined in its entirety, Paramore was not
entitled to long-term disability benefits.5 The Administrative Committee's decision to deny benefits
in this case thus was neither arbitrary nor capricious.
III. CONCLUSION
Paramore asks that we reverse the district court's order granting summary judgment in favor
of Delta. Paramore contends that the district court applied an incorrect standard of review in
evaluating the Administrative Committee's factual determinations and improperly found these
determinations to be supported by the record. We conclude that (1) where an ERISA-governed plan
confers discretion on an administrator to interpret plan terms and decide eligibility for benefits, we
time in the not too distant future ... ". Exh. 21. Dr. Wright similarly noted that "[p]sychological
testing results with this patient suggest considerable stress, but very little subjective
psychological discomfort," while at the same time observed, "I could not rule out the possibility
of a conversion disorder .... [and] there were indications of organic brain dysfunction on testing."
Exh. 17.
5
We find unpersuasive Paramore's assertion that the district court should have given greater
weight to the Social Security Administration's determination that Paramore was totally disabled.
Although a court may consider this information in reviewing a plan administrator's decision
regarding eligibility for benefits under an ERISA-governed plan, see Kirwan v. Marriott Corp.,
10 F.3d 784, 790 n. 32 (11th Cir.1994), an award of benefits by the Social Security
Administration is not dispositive of the issue before us, particularly given the measure of
deference that we afford a plan administrator's decision. Moreover, as noted by Delta, the
decision of the Social Security Administration to award benefits was rendered after the
Administrative Committee denied Paramore benefits; that determination consequently was not
available to the Administrative Committee during the relevant time frame.
review the administrator's fact-based conclusions regarding eligibility to determine whether these
conclusions are arbitrary or capricious and (2) although the medical reports submitted to the
Administrative Committee in this case were not a model of clarity, the Administrative Committee's
overall evaluation of these reports was rational. Its factual determinations, therefore, were neither
arbitrary nor capricious. The district court's order granting summary judgment in favor of Delta is
AFFIRMED.